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REVIEW OF DOMINION VIRGINIA POWER’S RECENT DSM CASE FILED PURSUANT TO § 56 -585. 1 A 5 OF THE CODE OF VIRGINIA (PUE-2009 -00081) May 27, 2010 Marriott Oceanfront North Hotel Virginia Beach Howard M. Spinner* Director – Division of Economics and Finance Virginia State Corporation Commission * Mr. Spinner’s views are his own. They do not necessarily reflect the views of the Virginia State Corporation Commission or its Staff.
Two years ago, I covered with you: • Staff’s Report to the VA General Assembly pursuant to the 3 rd Enactment Clause of SB 1416 • Dominion Virginia Power’s (VEPCO) Pilot Programs • Economists’ views on the meaning of “cost-effective, fair and efficient” in the context of utility DSM programs • Yet another pitch for the efficacy of retail price signals
Today, I’ll discuss events since then, including: • The Commission’s report in PUE-2009 -00023 regarding the Commission’s study to determine achievable, costeffective energy conservation and demand response targets. • VEPCO’s application for approval to implement 12 new DSM programs (and two associated rate adjustment clauses) docketed as PUE-2009 -00081. • This latter matter included a AMI (automated metering infrastructure) enabled VCP (voltage conservation program) that: – Made up the vast majority of the portfolio’s proposed costs and assumed energy savings – Proved controversial
• • • The Commission’s “DSM” Report More formally: Report to the Governor and the General Assembly of a Study to Determine Achievable and Costeffective Demand-side Management Portfolios Administered by Generating Electric Utilities in the Commonwealth. Evidentiary Proceeding Required by 2008 legislation Report Issued November 15, 2009 Report Covered VEPCO, APCo and KU (ODP) Three determinations required: – Range of consumption and peak load reductions potentially achievable by each electric generating utility – Just and reasonable ratemaking methodology for DSM – Which test should be given greatest weight in CBA
The Commission’s “DSM” Report: Findings • No evidence demonstrating existing 10% goal is unrealistic or unachievable • Attempt to quantify with specificity net cost of DSM to ratepayers based on the record evidence would be speculative • Commission will give greatest weight to RIM and TRC tests • Commission did not recommend any specific mandate to utilities regarding DSM targets, programs, or technologies.
VEPCO’s application: General • Filed July 28, 2009. pursuant to § 56 -585. 1 A 5. • Two rate adjustment clauses proposed for cost recovery • Controversy regarding nature of certain programs related to cost recovery responsibility of large commercial customers. • Commission Order entered March 24, 2010.
VEPCO’s application: AMI/VCP • Proposal was to replace virtually all meters to enable new functions, including…. . • VCP – new meters in conjunction with other new equipment to allow more precise control of distribution voltage • Vepco claimed energy savings of about 2 million m. Wh per year for a PVRR cost to ratepayers I estimated to be about $800 M.
VEPCO’s application: 12 programs • • • Voltage Conservation Program – AMI enabled Commercial Distributed Generation (also DR) Curtailment Service Program (also DR) Air Conditioner Cycling Program – peak shaving Residential Lighting Program Low Income Program ENERGY STAR® New Homes Program Residential Heat Pump Tune-up Program Residential Refrigerator Turn-In Program Heat Pump Upgrade Program Commercial HVAC Upgrade Program, Commercial Lighting Program
VEPCO’s application: AMI/VCP • • Cost/Benefit Analysis Trabue Experiment Alternative means of Voltage Control Alternative means of providing innovative rates • VEPCO’s 11 th Hour proposal – Withdraw request for system-wide deployment – Additional study in C’ville and NVA
VEPCO’s application: Commission Decision • Statutory time limit met – 8 months • SCC approved: 1. 2. 3. 4. 5. Air Conditioner Cycling Program – peak shaving Residential Lighting Program Low Income Program Commercial HVAC Upgrade Program Commercial Lighting Program • SCC continues to give greatest weight to RIM test followed closely by TRC test
VEPCO’s application: Commission Decision • Reduced annual amount to be collected in Riders C 1 and C 2 from $48. 4 M (revised company request) to $28. 1 M • M&V Reporting requirement – every six months • AMI/Voltage Conservation – Company request to approve cost recovery for 3 AMI/VCP demonstration projects not approved at this time – AMI/VCP program yet to be found “in the public interest. ” No program before the Commission in the case.